SunCoke Energy Inc.
) operating division SunCoke Energy Partners, L.P. has inked an
agreement to purchase Lakeshore Coal Handling Corporation for a
proposed price of $29.6 million all in cash. The company will buy
all of Lakeshore's assets, specified liabilities and business
operations. Lakeshore is a privately owned subsidiary of
The transaction is anticipated to conclude on Jul 31, 2013.
The acquisition is subject to the signing of a definitive
agreement and customary closing conditions.
SunCoke Energy's proposed purchase will increase the company's
distributable cash flow per unit by roughly 6% annually and be
immediately accretive to earnings. It plans to retain Lakeshore's
present operations and staff. In fact, Lakeshore offers coal
handling and blending services to SunCoke Energy's Indiana Harbor
coke making business.
The addition of the Lakeshore unit to SunCoke Energy's asset
portfolio will boost its presence in the steel value chain.
Lately, the company has been steadily venturing into the thriving
steel markets of India and China, which are expected to grow 5.9%
and 3.5% in 2013, respectively.
In early 2013, SunCoke Energy and VISA Steel Limited
officially commenced its joint coke making program, VISA SunCoke
Limited, in India where infrastructure and housing activities are
on the rise.
The company's Brazil operations will also capitalize on the
increased steel demand in the country due to the ongoing
infrastructure development for the 2014 football World Cup as
well as the 2016 Olympics.
Meanwhile, the World Steel Association has predicted global
steel demand to climb to 2.9% and 3.2% in 2013 and 2014,
respectively. SunCoke Energy's Lakeshore purchase looks
well-timed given these positive projections and will sit well
with the company's broad growth objectives. Other coal operators
expected to benefit from the upturn in worldwide steel demand are
Arch Coal Inc.
Walter Energy Inc.
However, tighter environment legislations might continue to
act as a headwind. Presently, SunCoke Energy carries a Zacks Rank
A coal industry player well positioned at the moment is Zacks
Ranked #2 (Buy)
Hallador Energy Company
Based in Lisle, Ill., SunCoke Energy engages in mining and
producing coke in the Americas. It offers metallurgical and
thermal coal for steel making processes.
ARCH COAL INC (ACI): Free Stock Analysis
HALLADOR ENERGY (HNRG): Free Stock Analysis
SUNCOKE ENERGY (SXC): Free Stock Analysis
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